Category Archives: United States

Are Overseas Military Members Being Cheated by US Unclaimed Property Departments?

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The AssetMine team has reviewed and analyzed 148 million unclaimed financial asset records valued at over $55 Billion and noted an unexpectedly large prevalence of unclaimed properties addressed to Overseas Military Mail Addresses.

AssetMine’s analysis identified approximately 75,000 lost and escheated assets addressed to US Overseas Military Personnel. The overwhelming majority of these assets are being held in New York, Virginia, California and Delaware.  Since many states refuse to publish the values of the escheated assets that they hold belonging to all owners it is difficult to value the exact amount of funds owed to military personnel but industry experts estimate it could be as high as $50 million.

The disturbing irony here is that US state governments are taking in money that belongs to military personnel who are often selflessly serving and defending their country overseas, and then making it difficult for them to locate and recover their assets. Unclaimed property holders and state governments should be honoring these patriotic men and women by making every effort to unite them (or their families) with these hard-earned funds instead of using the assets to fund government budget deficits.

Could New York be Withholding Foreign-Owned Unclaimed Property from their Online Searchable Database?

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US State governments have escheated tens of millions of assets worth tens of billions of dollars belonging to both domestic and foreign owners. An analysis of US State escheatment databases indicates that billions of dollars’ worth of dormant assets belonging to foreign owners in over 230 countries around the world have been transferred to US State treasuries over the past couple of decades. Foreign owners are at a great disadvantage in locating and recovering their lost assets in some US states and deserve the same consumer protection as is granted to domestic owners in the US and as US asset owners would expect to be granted when recovering their own assets internationally.

Of course, unclaimed funds can only be recovered for those assets that are publicly disclosed by state unclaimed property programs. When UP officials mysteriously fail to disclose assets for any reason, consumer protection rights are compromised, and state governments are unfairly benefiting.

For instance, from extensive analysis of publicly-available unclaimed property data provided by the Office of the New York State Comptroller, it appears foreign assets are vastly under-reported in their online searchable database. This is unacceptable as foreign owners of assets being held in New York (of which there are likely tens of thousands) will never be able to locate or recover their money.

This analysis shows that only about 3,000 international assets have “slipped through” into New York’s data pool of over 10 million records posted since 1985. This extremely low rate of international record prevalence is statistically too low to be a correct representation of the number of foreign-owned assets held in a jurisdiction such as New York, where international transactions are commonplace and numerous. This stands out even further when compared with other states, which do not have the level of international financial and business activity that exists in New York.

Unclaimed Property Priority Rules in the US

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When property is abandoned in the US and the rightful owner is nowhere to be found, the funds are remitted to the government and held there until a claimant comes forward. The concept is simple enough, however, there are often scenarios where it is unclear which government should get the funds! Is it the state where the transaction took place, the state where the owner is believed to be located, the state where the holder is incorporated, or the state where the holder’s primary business location resides?

The U.S. Supreme Court established two unclaimed property priority rules with its Texas v. New Jersey decision in 1965:

  • First Priority Rule:  Abandoned property must be escheated to the state of the owner’s last known address, as determined by the holder’s books and records.
  • Second Priority Rule:  The property is paid to the state of corporate domicile if the owner’s address is incomplete or unknown, or if the owner’s last known address is in a state that does not provide for escheat of the property owed.

The definition of “corporate domicile” has been a source of confusion for how to handle unincorporated holders. The state of “corporate domicile” can be interpreted as the state of organization or formation of the entity, on the other hand it could be its principal place of business.

This confusion can often make it difficult for owners to determine where their assets are, and in some cases they may end up somewhere other than they expect!

To make things slightly more complicated, there are exceptions to these rules for some asset types:

  • Following a 1972 decision in Pennsylvania v. New York prompting the Disposition of Abandoned Money Orders and Traveler’s Checks Act of 1974 (Act), money orders, traveler’s checks and similar written payment instruments other than third-party bank checks are escheated to the state where the money order or traveler’s check was purchased. If that information is not available, it escheats to the state where the holder’s primary place of business is located.
  • In the 1993 case of Delaware v. New York concerning unclaimed securities distributions held by intermediary banks, brokers and depositories, it was determined that the intermediary—not the issuer—is considered the holder. Thus, under the second priority rule, the intermediary’s state of corporate domicile receives the unclaimed property.

MoneyGram “Official Checks” Cause Unclaimed Property Dispute with Delaware

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As of June 2016, 23 US states are in legal dispute with the State of Delaware and MoneyGram Inc over the alleged improper handling of unclaimed property in the form of uncashed checks.

MoneyGram, which is incorporated in Delaware, offers a service of issuing “official checks,” which work similarly to money orders. But unlike a money order, MoneyGram merely backs the “official check” and pays the check amount only upon presentment. When an “official check” is never presented for payment, MoneyGram doesn’t release the money it collected for the “official check.” Thus, MoneyGram accumulates hundreds of millions of dollars each year in unclaimed funds when these checks are not presented.

The dispute hinges on whether the official checks are properly classified as third-party bank checks (as Delaware directed MoneyGram to remit them as) or are more similar to “money orders”, which under the Disposition of Abandoned Money Orders and Traveler’s Checks Act of 1974 (Act), entitles ownership to the “the States wherein the purchasers of money orders and traveler’s checks reside”.

Delaware Becomes Last State Not to Seek Unclaimed Property Owners before Escheatment

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Provisions in Pennsylvania’s new budget will leave Delaware the only state left that doesn’t require notification be sent to owners of dormant assets prior to the remittance of assets to the Department of Treasury.

Pennsylvania, like other states, now demands holders make a real effort to find the owners of unclaimed property, by way of first class mail with description of the property, the property’s owner, its value and how to contact the state treasury.

Historically, Pennsylvania and Delaware have been the only two states in the nation to NOT require that notification be given to property owners before unclaimed property is transferred to the state. When Pennsylvania enacted these changes (effective on September 10 2016), Delaware became the lone state with no such consumer protective provision in their unclaimed property law. Delaware’s aggressive unclaimed property collection tactics are already under fire as a result of lawsuits brought against them such as by Temple Inland and other disputes among states over ownership of unclaimed property.

One in Ten Americans Owns Unclaimed Money

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There is a chance that the US government might be holding unclaimed money in your name and waiting for you to claim it. Throughout a person’s lifetime, the chances of inadvertently leaving a trail of unclaimed property is higher than one might think, even among those who are particularly financially organized. Opening a bank account, purchasing an insurance policy, paying taxes, changing jobs, paying into retirement programs or pensions, purchasing stocks, moving addresses – these are things we all do that could result in unclaimed property.

Suppose your last payroll cheque is issued to an old or incorrect address after a career change. Perhaps a bank account is forgotten or left dormant with no activity for many years. Or maybe an insurance policy was not redeemed upon the death of a family member, or a tax refund cheque was never cashed or sent to the wrong address.

Experts estimate that 1 in 10 Americans is owed unclaimed property by one or more government entities around the world. Visit our Inquiries and Database Searches page to submit your name for a free global search.

Uniform Unclaimed Property Act Revised by the Uniform Law Commission

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The Uniform Law Commission is a non-profit, unincorporated association that researches, drafts, and promotes enactment of US legislation in areas of state law where uniformity is desirable and practical. In 2013, the ULC appointed a committee, called the Revisions to the Uniform Unclaimed Property Act committee or “RUUPA” committee, which over the past few years has gathered written and oral testimony, and held public meetings in regard to amending the existing Uniform Unclaimed Property Act which has been in place since 1995.

In July 2016, the ULC voted favorably on revisions put forth to the Uniform Unclaimed Property Act. When the majority of state legislatures open sessions in late winter or early spring, 2017, the RUUPA may be introduced for consideration either in whole or in part.

Here are the highlights of the approved revisions:

Statute of Limitations and Repose
The RUUPA includes a statute of limitations stating that the Unclaimed Property Administrator can’t bring an action to enforce the Act relating to reporting, payment or delivery of property five (5) years after the business filed a non-fraudulent report. Further, the administrator cannot bring an action or examine a holder related to a duty under the RUUPA more than 10 years after the duty arose.

Record Retention Period
A record retention period of 10 years after the unclaimed property report was filed or should have been filed is included in the RUUPA.

Audit Transparency
To make unclaimed property audits more transparent, the RUUPA requires that the administrator follow the state’s procurement law in hiring contract auditors, provide the business to be examined with a confidentiality agreement, and provides for an informal conference with the administrator and an administrative appeal provision. Plus, the administrator is required to provide a report annually to the legislature/governor regarding the revenues received from audit (by contract auditor) and the claims paid and denied.

Electronic Due Diligence
Notices to owners of property about to be escheated will still have to be sent via US mail but also must be sent to the owner by electronic mail if the owner has previously consented to receiving notifications in this manner. Under the RUUPA, such notices must be sent within 60 to 180 days prior to the reporting deadline.

State Sale of Remitted Securities and Claimant Payment
Under the RUUPA, a state administrator is restricted from selling securities within three (3) years after receipt by the state and the state has given notice to the owner. If the administrator sells the securities within six (6) years after they have been delivered to the state and a valid claim is made within the time, the claimant is entitled to receive replacement shares and accrued dividends and other property that may be the result of stock splits or corporate actions.

Pay Cards Dormancy Period
Different from wages, salary or payroll paid via check which are assigned a one (1) year dormancy period, outstanding balances on pay card accounts are assigned a three (3) year dormancy period.

Securities Dormancy Period Trigger
The trigger for initiating a three (3) year dormancy period for securities is a second consecutive returned communication that was sent via first class US mail to the owner. If the owner doesn’t receive communication from the holder via US mail, the holder is required to confirm the owner’s interest by sending an electronic mail communication within 2 years after the owner’s last indication of interest in the property. If no response is received to the electronic mail or the holder is notified that the electronic mail was not received, the holder must attempt to contact the owner via US mail and the three (3) dormancy period would be triggered and begin to run after that US mail is returned as undeliverable.

Gift Card and Business to Business Exemptions
While almost two thirds of the states have unclaimed property laws that exempt gift cards from the law under certain conditions, the RUUPA makes such an exemption optional for state legislatures that choose to adopt the RUUPA. Further, while about one third of the state unclaimed property laws exempt specific types of credits that occur between businesses, the RUUPA does not include such a provision nor does it make mention of making it optional.